Tort reform may mean bringing your case to the public

Posted on February 01, 2004 | Type: In the News
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Last year, the United States House of Representatives passed legislation that would have limited contingency fees collected by attorneys and set caps on non-economic damages at $250,000.  But the bills never made it out of the Senate.  In response, President Bush has indicated he will make tort reform a priority during the presidential campaign.  He also remarked that, "The senators must understand that nobody in America has ever been healed by a frivolous lawsuit."[i]

Legislative action in individual states has been more successful.  Several states, including Idaho and Arkansas, recently passed legislation capping non-economic damages.  Last September, Texas enacted a constitutional amendment allowing the legislature to cap non-economic damages at $250,000.  Currently, over half the states have enacted limits on non-economic damages in medical malpractice cases.  In Arizona, several attempts have been made to modify the state's Medical Malpractice Act.  Caps on damages, however, are not one of the solutions being considered.
Why all the flurry of legislation concerning medical malpractice claims?  As a Newsweek cover story (December 15, 2003) points out, tort costs in the United States are estimated to be over $200 billion dollars a year.  Of that amount, approximately $25 billion can be attributed to medical malpractice cases.[ii]  In Arizona, the state itself spends an average of $16 million on tort-related claims.[iii] 
In theory, all that litigation should help ensure victims are properly compensated and stop future negligent acts from occurring.  The reality is that the current system is a poor method for redressing injuries and preventing future medical errors.  Studies have shown that most instances of negligence do not result in lawsuits and most lawsuits do not result in findings of negligent care.[iv]  As the Newsweek story noted, medical errors often go undetected and malpractice allegations are unfounded in as many as 80 percent of the cases.
The current system has not only failed to properly compensate victims and deter future misconduct but has diminished the overall quality of health care and increased costs.  For example, studies have found that fear of litigation may encourage physicians to practice "defensive medicine," by ordering additional tests or unnecessarily referring patients to outside specialists.[v]  According to one study, the health care industry spends about $50 billion per year on defensive medicine.
The most well-publicized aspect of medical malpractice litigation is the impact such claims have on malpractice premiums.  A 1994 GAO study estimates that malpractice premiums make up one percent of total health care expenditures.  Given that health care expenditures are estimated to be $1.4 trillion, that amounts to $14 billion a year.[vi]  In addition to the billions spent by hospitals and nursing homes, doctors alone spent $6.3 billion on malpractice premiums.[vii]  Unfortunately, very little of the money is used to compensate patients for injuries they have sustained.  In fact, almost three-quarters of the money spent on premiums is wasted on legal, administrative and related costs.[viii]
As a result of such economic pressures, Congress has proposed several solutions, including limiting contingency fees paid to lawyers, imposing new time limits on filing lawsuits, limiting financial responsibility to defendant's share of legal culpability and capping the amount paid for non-economic damages.[ix]  One major problem with the proposed legislation is that Congress may not have the authority to impose such restrictions on the states.  The United States Constitution was designed to limit the power of the federal government, so unless a power is specifically enumerated, Congress may not have the power to act, no matter how worthy the perceived solution.
Proponents of federal legislation have argued that Congress has the authority to pass sweeping tort reform as a result of its power to regulate commerce pursuant to Article I, Section 8 of the United States Constitution.  Specifically, the "Commerce Clause" provides that Congress has the power "To regulate Commerce?among the several states." In recent decades, that provision has been interpreted to allow Congress to enact regulations concerning everything from minimum wage laws to the Americans with Disabilities Act.
Recently, however, the U.S. Supreme Court has begun to scrutinize more closely congressional legislation enacted pursuant to the commerce clause.  For example, in 1995 the Court struck down the Gun-Free School Zones Act in United States v. Lopez.[x]  In 2000, the court held that the Violence Against Women Act is unconstitutional because Congress did not have the authority to enact the legislation.[xi]  Because neither case concerned an article of commerce or a matter "substantially affecting" commerce, they were both determined to be unconstitutional.  Thus, any federal legislation concerning state tort reform likely will be challenged as well.
As well as being constitutionally suspect, any proposed federal legislation is contrary to the traditional ideas of federalism.  That concept of federalism provides that the federal government is limited in its powers and that each state retains general "police powers" over its citizens.  For that reason, the Tenth Amendment provides, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."  As James Madison explained in The Federalist Papers, No. 45, the powers delegated to the federal government are "few and defined."  The powers reserved to the states extend to all objects concerning "the lives, liberties and properties of the people."  Indeed, most states are developing statutes concerning tort reform, and the diversity of those reforms reflects the reality that the states are "laboratories of democracy."
Ironically, several of the proposed solutions already exist in Arizona.  For instance, although we don't have a "loser pays" system of justice, judges are nonetheless empowered to impose attorney fees and costs.  Such awards, however, are limited to cases involving bad faith or where a final judgment exceeds a proposed pretrial settlement in cases arising out of contract. Also, Arizona statutes have abolished joint and several liability, which means that a defendant typically will be liable only for damages equal to his or her share of fault.
Other attempts at tort reform in Arizona, however, have been less successful.  For example, A.R.S. 12-582 was enacted to mitigate the impact of large jury awards by providing for payment of damages over time instead of via lump-sum awards.  But in Smith v. Myers, the Arizona Court of Appeals held that the legislative scheme violated Article 2, Section 31 of the state constitution because it limited the recovery of damages for death or personal injury.[xii]
For better or worse, the decision in Smith v. Myers rested on solid constitutional precedence.  The drafters of the Arizona constitution included strong provisions limiting the legislature's ability to diminish the right to sue for damages.  Specifically, Article 2, Section 31, provides, "No law shall be enacted in this state limiting the amount of damages to be recovered for causing death or injury of any person."  Also, Article 18, Section 6, provides, "The right of action to recover damages for injuries shall never be abrogated, and the amount recovered shall not be subject to any statutory limitation."  The drafters included those protections because they didn't trust the legislature or judges to protect injured parties and instead relied upon the common sense of citizens to render justice in each individual case.[xiii]
Legislative attempts to bypass those provisions have been unsuccessful.  Just last year, the Arizona Supreme Court struck down another attempt at medical malpractice reform.  In striking down a portion of the Arizona Medical Malpractice Act which eliminated a cause of action for battery in malpractice cases, the court held that such legislation "abrogates" a cause of action.[xiv] The court once again affirmed that any attempts to abrogate, or diminish, a common law cause of action are unconstitutional.
Last year, Senator Barbara Leff (R-Paradise Valley) introduced SB 1047.  The bill, which was defeated, was an attempt to expand current law requiring that claimants in civil actions certify whether expert opinion testimony is necessary to prove the standard of care or liability in a lawsuit against registered professionals.  The irony is that similar legislation, which required an actual affidavit from an expert in the field, was struck down by the Arizona Court of Appeals in 1997.  In Hunter Contracting Co. v. Superior Court, the court held that requiring an affidavit from an expert when filing a lawsuit is unconstitutional because it impeded the fundamental right to pursue damages under the state constitution.[xv] 
Rightly, any debate on medical malpractice reform in Arizona must begin with a discussion about the state constitution.  In 1986, 1990 and 1994 attempts were made via the ballot to amend the constitution to change Arizona tort law.  Without such amendments, legislative attempts at reform will be challenged and likely found unconstitutional.[xvi]  If the medical community believes tort reform is necessary to ensure quality health care and lower costs, it must make its case to the general public. Such an open constitutional debate will be healthy for everyone.
[i] Mike Allen, "Bush Celebrates Medicare Victory; Next on Agenda: Malpractice-Suit Curbs," The Washington Post, November 26, 2003, A2.
[ii] "Trends and Findings on the Costs of the U.S. Tort System," Tillinghast-Towers Perrin, February 2003.
[iii] Pat Flannery, "Claims Against Arizona Agencies Cut Deeply," The Arizona Republic, November 30, 2003, p. A1.
[iv] Wu, Albert W., "Handling Hospital Errors: Is Disclosure the Best Defense?" Annals of Internal Medicine, Vol. 131, No. 12 (1999).
[v] American Medical Association (AMA), National Physician Survey on Professional Medical Liability (Chicago, Ill.: April 2003).  American Academy of Orthopedic Surgeons, Medical Malpractice Insurance Concerns-Final Report (Rosemont, Ill.: April 2002).
[vi] Office of the Assistant Secretary for Planning and Evaluation using estimates from the Council of Economic Advisors, February 2003.
[vii] U.S. Department of Health and Human Services,  Office of the Assistant Secretary for Planning and Evaluation, Confronting the New Health Care Crisis: Improving Health Care Quality and Lowering Costs By Fixing Our Medical Liability System.,  July 25, 2002.
[viii] Ibid.
[ix] Ibid.  According to the report, malpractice reforms, including damage caps, can reduce total medical expenditures by five to nine percent per year without any adverse health consequences. 
[x]United States v. Lopez, 514 U.S. 549 (1995).
[xi]United States v. Morrison, 529 U.S. 598 (2000).
[xii]Smith v. Myers, 181 Ariz. 11 (App. 1994). 
[xiii]Toni McClory, Understanding the Arizona Constitution, (The University of Arizona Press: Tucson,  2001).
[xiv]Duncan v. Scottsdale Medical Imaging, Inc., 205 Ariz. 306 (2003). 
[xv]Hunter Contracting Co., Inc., v. Superior Court, 190 Ariz. 318 (App. 1997).
[xvi]One proposal that has not been discussed is requiring malpractice claimants to submit their cases to a medical liability review panel before the complaint proceeds to superior court.  The negative or positive recommendation of the panel would be admissible at a subsequent trial.  Such a procedure was upheld by the Arizona Supreme Court in Eastin v. Broomfield, 116 Ariz. 576 (1977).

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